Setting Up Power of Attorney
A power of attorney (POA) grants a person the power to act on someone else's behalf and in their name. They are regularly put in place in anticipation of illness or absence when documents might need to be signed.
Family members or friends, unfortunately, do not have an automatic right to give instructions and make decisions on your behalf, even if it is the obvious thing to do, therefore granting power of attorney and obtaining this legal documentation is necessary to protect your best interests if for whatever reason you are unable to deal with your own affairs. Without these documents, families could find themselves in limbo and unable to deal with joint property or accounts in the absence of the named person.
Reasons for Granting a Power of Attorney
There are a variety of reasons for choosing to make an LPA, depending on the type. A common reason for choosing a health and welfare LPA is for peace of mind about the future if you have a serious illness diagnosed or are worried you might get one. It can be upsetting to consider what would happen if you were to lose your mental capacity before you died and who would make your medical and financial decisions on your behalf.
Granting power of attorney restores an element of control amid the uncertainties of the future. Knowing that a trusted friend or family member will be there to take care of things can be a significant weight off people’s shoulders. Equally, those without immediate family or friends can find the concept of an LPA particularly reassuring if they are worried about what the future holds for them.
Types of POA
- General power of attorney
A general power of attorney does not need to be registered and can therefore be used immediately as soon as the individual granting it has signed it. It is, therefore, very quick and relatively inexpensive to put in place.
An attorney’s authority under a general power of attorney will expire if the donor loses mental capacity or dies. This is where a Lasting Power of Attorney would be more appropriate.
- Lasting power of attorney
A lasting power of attorney takes a lot longer to put in place than a General Power of Attorney and needs to be registered with the Office of the Public Guardian. This alone can take 8 to 10 weeks so can’t be relied upon at short notice. Whilst you don’t have to register your LPA straight away, it is a good idea to do so. This is because any mistakes in the form can be corrected while you still have the capacity.
The two types of lasting power of attorney:
Property and finance LPA
Your attorney can use this authority while you still have the mental capacity or you can stipulate that you only want it to come into force if you lose capacity. This LPA can cover things such as:
- Paying bills
- Bank accounts
- Paying the mortgage
- Buying and Selling property
- Benefits and pension
- Arranging repairs to a property
- Entering into agreements and generally signing on your behalf
You can restrict the types of decisions your attorney can make or let them make all decisions on your behalf.
Health and Welfare LPA
This authority can only be used once you have lost mental capacity on decisions such as:
- Your medical care such as giving or refusing content for medical treatment, life support or life-sustaining treatment.
- Where you should live. Such as, whether you should move into full-time care at a care home or with a family member.
- Who you should have contact with and the social activities in which you should take part.
- Your daily routine, including everyday matters such as what you should eat and what you should wear.
You might have lost mental capacity due to dementia, an accident or you might be unconscious and in a coma. It isn’t possible to revoke the LPA once you have lost mental capacity, so it’s important to consult an LPA solicitor before making one.
- Corporate power of attorney
Such authority can be granted so that a representative can sign documents on behalf of a company. This is so the business can operate as normal in the absence of its director. The attorney has the same power as a director. A power of attorney is often incorporated in a partnership agreement to grant each partner the ability to act for the other partners in connection with partnership matters. This can be an effective mechanism if a partner is unable to sign documents or simply refuses.
As a business owner, it is crucial to consider whose judgment you can trust to make commercial decisions with the best interests of the company and its shareholders at heart if you were:
- To have an accident
- Have a medical condition that incapacitated you
- Abroad on holiday and unable to sign time critical documents
To avoid potential unexpected disruption, it should be part of the business owner’s continuity plan and crisis management strategy to have in place a business power of attorney.
How Do I Grant a Corporate Power of Attorney?
Firstly, the director must ensure that they have the authority under the company articles to grant a corporate power of attorney.
It is worth noting that there is no statutory authority for a company to grant a power of attorney on an individual director’s behalf, so if any documents can only be signed by a particular director a corporate power of attorney will not necessarily assist.
Once the authority to enter into a corporate power of attorney has been confirmed, it is good practice to prepare board minutes to consider the requirement for the corporate power of attorney and the powers to be delegated. A corporate power of attorney must be signed as a deed meaning the signature of the authorising person must be witnessed.
What is My Duty of Care as an Attorney?
Acting as an attorney obliges you to maintain a duty of care to the donor and not to benefit yourself. It is important to avoid any potential conflicts of interest. For instance, you must keep accurate accounts in all of your dealings as an attorney and the donor’s money and property must be kept separate from your own.
How Can I Grant an LPA?
If you’re considering setting up a power of attorney, there are a few requirements that must be met:
- You must be over 18.
- You must have the mental capacity to do so and must not have been pressured into making one.
- Your LPA can’t be made jointly with another.
- You can only rely on your LPA after it has been successfully registered with the Court of Protection.
How can Newtons help?
Your local LPA solicitors at Newtons can talk you through the process of granting an LPA if you have any questions or would like to explore this further. Please see our video guide to LPAs below, or get in touch with our Wills, Trusts and Probate team to discuss your options.
Our wills, probate and trusts team is here to help.
For advice on which power of attorney is the right choice for you or your business given your individual circumstances, please contact a member of our dedicated private client team.